Careful Terminations: Why Blurting out Justifications for Employee Terminations Is Almost Always a Bad Idea

I typically advise clients that it's a mistake to rush into employment decisions, even though a situation may call for immediate and drastic action. The reason I give this advice is that rushed employment decisions are almost always based on sloppy, incomplete, or misleading investigations, leading to sloppy, incomplete or misleading conclusions. The pressure to get something done almost always overrides the pressure to get something right. And there are significant consequences for not getting things right.

Case in point: an employee at a retail establishment found herself being accused of racism after she innocently typed in generic data on a computer database purchase return record. Unfortunately, a former employee had sabotaged the database so that when the commonly used generic data was entered, the return receipt printed out a racial slur. When the receipt went to an African-American family, the incident went viral and spread over the Internet. Two days after learning about the return, and before its internal investigation was complete, the company fired the employee.

The company then compounded its error by releasing a statement designed to mollify the public relations firestorm that was developing around the incident, indicating that it had fired the offending employee. And even after its investigation indicated that in fact another employee had been responsible for the incident, the company issued a "clarifying" statement that simply indicated that corrective actions have been taken, but did not correct the impression that the fired employee was guilty of racial harassment.

The appellate court reviewing the case (the trial court dismissed plaintiff's claim of defamation) determined first that the initial and subsequent press releases created a relatively clear implication that the plaintiff was responsible for entering the racist language, something that was not true. The court then determined that the plaintiff was not a public figure, so that she was only required to make a showing of negligence on the part of her former employer to sustain her defamation claim. Finally, the court noted that the plaintiff had little difficulty in showing damage to her reputation, given the widespread publicity she received as result of the store's press release. The appellate court reversed the lower court and put the case back for trial.

Much of the problem here could've been avoided if the store had: a) completed its investigation before releasing the public statement about what happened; b) published a or issued a correction in its clarification that did not point at the plaintiff as the cause of the problem. But because of the publicity storm, store management apparently felt it was necessary to put something out to mollify the mob. The end result-a defamation case that is going to go to a jury whose sympathy will likely reside almost solely with the plaintiff.